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The Dose - JK Wall

Welcome to The Dose, which tackles the finances behind local health care and life sciences and points to the most interesting national analysis. Your host is J.K. Wall.

Health Care & Life Sciences / Life Science & Biotech

All of a sudden, HIP 2.0 has a cloudy future

December 4, 2015

I thought Gov. Mike Pence’s expanded version of the Healthy Indiana Plan was rock solid.
 
The governor and his staff spent nearly 18 months negotiating with the Obama administration to use the Medicaid expansion money approved by the Affordable Care Act to instead expand a conservative, privately run insurance plan that requires individual payments to health savings accounts.
 
The fact that Pence and Obama came to terms was a huge deal (which unfortunately for Pence was immediately eclipsed by his fumbles on This Just IN, a state-based news service, and the RFRA debacle). But with each side able to claim victory, I figured this was an agreement with an enduring and bright future.
 
But this week, serious clouds moved in. There are two forces at work that threaten the very existence of HIP 2.0, as Pence’s program is called.
 
Let’s call these two forces the Liberal Cloud and the Conservative Cloud.
 
The Conservative Cloud is embodied by Republicans in Congress. After 56 votes by the House of Representatives to repeal all or part of Obamacare, only to run short of support in the Senate, it finally became apparent this week that enough Senators are willing to vote for repeal.
 
The Indiana Democratic Party jumped on that turn of events Thursday, sending out an email that said funding for HIP 2.0 was in jeopardy because of the GOP drive in Washington, D.C., to repeal Obamacare.
 
“Mike Pence still calls for its full repeal, and he won’t be honest by admitting that this repeal will cut the health care for Hoosiers who rely on this coverage,” said Drew Anderson, communications director for the Indiana Democratic Party.
 
Pence’s staff put out statements noting that there are other funding sources for HIP 2.0—although the Obamacare Medicaid money provides the lion’s share. The Pence staff also noted that the GOP effort would include a 2-year grace period to figure out new funding or to transition Hoosiers off HIP 2.0.
 
Now, even though Republicans have passed a repeal of Obamacare, there is zero chance it becomes law so long as President Obama remains in office.
 
But if a Republican were to win the presidential election next year, then in 2017 Republicans could repeal or defund Obamacare for real.
 
“We’re very concerned that whatever political maneuverings happen around the Affordable Care Act that we’re able to protect those who are newly covered here in Indiana,” said Caitlin Priest, director of public policy for Covering Kids & Families, which has been helping Hoosiers sign up for coverage under HIP 2.0.
 
The Liberal Cloud is that the Obama administration is concerned that HIP 2.0 might seriously undermine its beliefs and goals for the Medicaid program—not just in Indiana but around the country. A core principle of HIP 2.0 is "personal responsibility;" so it requires modest payments from each beneficiary. By contrast, traditional Medicaid does not require any financial contributions from residents with incomes below 150 percent of the federal poverty limit.
 
Already, Michigan and Idaho have programs that are somewhat similar to the Healthy Indiana Plan. And many other states are looking at the Indiana model.
 
The Governor-elect in Kentucky, Matt Bevin, has said he wants to follow Indiana’s lead on health coverage for low-income residents—an about-face from the entirely loyal Obamacare implementation pursued by Kentucky over the past three years.
 
So the Obama administration is subjecting HIP 2.0 to an unusual amount of scrutiny.
 
This fall, the Obama administration hired its own contractors to evaluate HIP 2.0, even though it has also required the state of Indiana to hire its own outside firm to evaluate the program.
 
That second outside evaluation will be partly conducted by the Urban Institute, a left-leaning think tank in Washington, D.C., which has previously produced reports that have called some of HIP 2.0’s features “dubious.”
 
So on Thursday, Pence fired off a letter to the Obama administration asking it to cancel its contract with what he described as biased contractors.
 
“I am concerned that two evaluations being conducted at the same time has the potential to create contentious outcomes which can impede fair, impartial, and empirical analysis of demonstration projects,” Pence wrote in a letter to Sylvia Burwell, the U.S. secretary of health and human services.

He added, “I do not believe HIP will be objectively assessed by the chosen contractors. I ask that you intervene in this matter immediately to terminate the second federal evaluation.”

The Pence administration on June 1 hired the Virginia-based Lewin Group, which has conducted analyses of health policy for four decades. However, the Lewin Group is viewed with suspicion by some policymakers because it is owned by Minnesota-based UnitedHealth Group Inc., the largest health insurer in the nation.
 
One source told me that this spit-spat is just the beginning of a serious fight in 2017 over whether to renew the HIP 2.0 program beyond the three-year term it won from the Obama administration.
 
So before HIP 2.0 can establish itself, it looks like the Pence administration will have to fight a two-front battle—convincing skeptical liberals that it can, in fact, achieve better health outcomes than traditional Medicaid and convincing conservatives allergic to anything that expands federal spending that HIP 2.0 is a government program worth preserving.

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